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[G.R. No. 149568.November 14, 2001]

PHILIPPINES NATIONAL BANK vs. REPUBLIC OF PHILIPPINES et al.

SECOND DIVISION

Gentleman:

Quoted hereunder ,for your information ,is a resolution of this Court dated NOV 14 2001.

G. R. No. 149568 (Philippine National Bank vs. Republic of the Philippines represented by the Director of Lands.)

On September 22, 1969, Angelito C. Bugayong was issued a sales patent covering a 41,276 square meter parcel of land in Bocana, Barrio Kabacan, Davao City by the Bureau of Lands. On the basis of the sales patent, the Register of Deeds of Davao City issued OCT No. P-2823 to Bugayong. Bugayong later subdivided the land into four lots, one of which (Lot No. 4159-B covered by TCT No. T-32770) was sold by him to the spouses Reynaldo Rogacion and Corazon Pahamotang. After obtaining TCT No. T-37786 in their names, the spouses mortgaged the lot to the Philippine National Bank (PNB). As they defaulted in the payment of their loan, the PNB foreclosed the property and purchased it at the foreclosure sale as the highest bidder. Eventually, the PNB consolidated its title.

Sometime in 1981, upon the petition of the residents of the land, the Bureau of Lands conducted an investigation into the sales patent issued in favor of Angelito C. Bugayong and found the sales patent to have been illegally issued because (1) the land was released as alienable and disposable only on March 25, 1981; previous to that, the land was within the forest zone; (2) the land is covered by sea water during high tide; and (3) the patentee, Angelito C. Bugayong, had never been in actual possession of the land.

Based on this investigation, the government instituted the present suit in 1987 for cancellation of title/patent and reversion of the parcel of land against Angelito C. Bugayong, the Rogacion spouses, and the PNB, among others.

On July 6, 1996, the trial court rendered a decision declaring OCT No. P-2823 and all titles derived therefrom null and void and ordering reversion of the subject property to the mass of the public domain. On appeal, the Court of Appeals affirmed the trial court's decision. Hence this petition.

First. Petitioner contends that it had a right to rely on TCT No. T-37786 showing the mortgagors Reynaldo Rogacion and Corazon Pahamotang's ownership of the property.

The contention is without merit. It is well settled that a certificate of title is void when it covers property of public domain classified as forest or timber or mineral lands. Any title issued covering non-disposable lots even in the hands of an alleged innocent purchaser for value shall be cancelled (Republic v. Reyes, 155 SCRA 313 (1987);

Republic v. Court of Appeals, 148 SCRA 480 (1987)). In this case, petitioner does not dispute that its predecessor-in-interest, Angelito C. Bugayong, had the subject property registered in his name when it was forest land. Indeed, even if the subject property had been eventually segregated from the forest zone, neither petitioner nor its predecessors-in-interest could have possessed the same under claim of ownership for the requisite period of thirty (30) years because it was released as alienable and disposable only on March 25, 1981.

Second. Petitioner's contention that respondent's action for reversion is barred by prescription for having been filed nearly two decades after the issuance of Bugayong's sales patent is likewise without merit. Prescription does not lie against the State for reversion of property which is part of the public forest or of a forest reservation registered in favor of any party. Public land registered under the Land Registration Act may be recovered by the State at any time (Republic v. Court of Appeals, 258 SCRA 223 (1996)).

Third. Petitioner contends that assuming that OCT No. P-2823 and its derivative titles are indeed void, the Court of Appeals erred in failing to hold that, as a mortgagee in good faith and for value, it is entitled to claim damages from the Assurance Fund established under P.D. No. 1529 (Property Registration Decree). Petitioner did not raise this issue when it appealed the trial court's decision. Hence, it cannot do so for the first time in this appeal.

WHEREFORE, the petition is DENIED for lack of showing that the Court of Appeals committed any reversible error.

Very truly yours,

(Sgd.) TOMASITA M. DRIS
Clerk of Court

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